Q&A Following Worldwide Threat Assessment Brief

Question and Answer Session Following the Worldwide Threat Assessment Brief
to the Permanent Subcommittee on Investigations
of the Senate Committee on Government Affairs
by the DCI, John M. Deutch

February 22, 1996The following is the actual dialog of the Question and Answer Session:

SENATOR SPECTER: Thank you very much, Director Deutch.

We will proceed now to ten minute rounds of questions.

Director Deutch, I begin with the issue of the use by the intelligence
community, alleged use by the intelligence community, of newspaper reporters,
representatives of the media. There had been a generalized view that
the intelligence community was not using newsmen, newswomen for intelligence-gathering
operations. Recently an issue was raised in the media about an exception
to that general rule where there were some extraordinary circumstances.

The concern has been articulated that if the newspapers and media
generally are to retain their unique status with the protection of the
First Amendment freedom of speech, freedom of press, that those kinds
of activities ought not to be engaged in.

A counter-argument has appeared publicly, the weight of it I do not
know, that some circumstances are so extraordinary as to warrant an
exception to that generalized rule.

We would be interested to know, first of all, whether there has been
a rule that the intelligence community would not use newspaper and media
personnel generally for intelligence operations. If that rule has been
in existence, are there exceptions? If so, what are they? And your view
as Director as to the philosophy behind it and whether any circumstance
might be so extraordinary as to warrant an exception to that rule.

Now I've asked you a series of questions because they're inter-related,
and customarily the best procedure is to ask questions one at a time.
But I give you that composite picture and ask you to address it.

DR. DEUTCH: Thank you very much, Mr. Chairman.

Let me begin by saying that my sympathy on this matter is very, very
much with the journalistic community. I absolutely appreciate and understand
the reasons that lead them to urge no interference or no cooperation
with espionage services. I understand the relationship to the special
character of the newspapers and other media according to the First Amendment.
And frankly, as a former provost, I understand the similar kinds of
concerns that academics have about potential use by the intelligence
community of academics in intelligence matters.

But I hope, Mr. Chairman, that you and the citizens of this country
can appreciate that Directors of Central Intelligence have to also concern
themselves with perhaps very unique and special threats to national
security where American lives are at risk; where very important unique
access can be given to protect American interests abroad; where it would
be necessary to consider the use of an American journalist in an intelligence
operation...

SENATOR SPECTER: So you're saying there are some extraordinary circumstances
where the U.S. intelligence community would call upon journalists?

DR. DEUTCH: That's correct, Mr. Chairman. Let me make a remark about
our policy that has been in existence since 1977. I believe when that
policy was adopted that it was publicly announced, so it's not been
a secret policy. The policy says that we will not use American journalists
except under very, very rare circumstances where...

SENATOR SPECTER: How would you define those "rare" circumstances,
as you articulate it?

DR. DEUTCH: Those rare circumstances are defined by considerations
by the Director of Central Intelligence or the Deputy Director of Central
Intelligence where they would consider the information to be of such
importance, or the access to be of such tremendous importance, to the
interests of the United States and to American citizens, that they would
waive consideration and use an American journalist.

SENATOR SPECTER: That's a fairly generalized statement, Director Deutch,
the interests of the American people. Can you be more specific? Perhaps
even illustrate that policy, if possible, without disclosing methods,
sources, or something that is sufficiently far in the past not to compromise
any ongoing matter?

DR. DEUTCH: Let me try to respond this way.

SENATOR SPECTER: Obviously this is a matter of great importance, and
this is something that this committee, I know, will want to evaluate,
and I'm not prepared to say one way or another. This is something which
is of sufficient seriousness that we ought to think it through. But
I do believe we need a little more specification as to under what circumstances
the Director of CIA thinks the rule ought to be excepted.

DR. DEUTCH: I'd be happy to try and give you two hypothetical examples.
One would be where you had a journalist involved in a situation where
terrorists were holding U.S. hostages, where that journalist might have
tremendously unique access in such a situation, or where there was particular
access to a nation or a group who had an ability to use weapons of mass
destruction against the U.S. These are the kinds of circumstances where
I think it would be very difficult not to take advantage of every possible
way of defending American lives.

SENATOR SPECTER: Well then would you define the exception as circumstances
where there's an imminent risk to the lives of American citizens or
the lives of others?

DR. DEUTCH: Well I'm not prepared at the present time to lay out a
set of criteria for when these exceptions might be granted, but I'd
be happy to work on that and to consider that. But that's the kind of
situation where I believe that exceptions would be legitimate.

Now I want to say again, sir. I do understand and stress that our
general rule is we do not use American journalists, we do not use American
news organizations. That is our general policy. It is only in very rare
circumstances that we would consider exceptions, when there are particular
situations which involve risk to American lives or particular questions
of absolute access on matters of important or critical national security
matters. We would not do it as a matter of policy, in general, to gain
foreign intelligence. And I want to say again, that my sympathy is very
much with those groups who are concerned about their integrity being
compromised in some way by this kind of covert involvement.

SENATOR SPECTER: Well you have carefully articulated in the disjunctive
circumstances where American lives were at risk or lives of other were
at risk, or circumstances where there were particular national security
interests involved. And there is a fair distance between those two categories.

What we would ask you to do would be to consider a more precise definition
of the second category. If you have hostages or if you have an imminent
threat of use of weapons of mass destruction, that's understandable.
If you talk about the generalized national security interests, that
can have a pretty broad sweep. So we would ask you to be more definitive
on that.

DR. DEUTCH: And I would be very comfortable doing that. My intention
here is not to leave a very broad category, but indeed, to narrow it
as much as possible. So we would be happy to do that. And what I'd like
to do is give you a written statement of what I propose those criteria
to be.

SENATOR SPECTER: Would it be realistic to further limit the authority
to the Director himself or herself as opposed to the Deputy Director,
unless the Director was incapacitated?

DR. DEUTCH: Frankly, my strong view about management is that a Director
and his Deputy have got to be alter egos, and so I think that as it
is stated now is exactly appropriate. I think the current criteria is
proper.

SENATOR SPECTER: As a possible additional safeguard, if that is to
be the policy of the CIA, and I'm not saying that I agree that it ought
to be, would it be appropriate to further condition that on consultation
notice or perhaps concurrence with the Chairman and Vice Chairman of
the respective intelligence committees? Or does that diffuse the power
too much?

DR. DEUTCH: I certainly would resist concurrence, but I do believe
that the current practice is and has been since the beginning, that
there is notice given when it occurs.

SENATOR SPECTER: Well that's a pretty good sign, because no notice
has been given to this Chairman.

SENATOR SPECTER: Well, the absence of notice I think you can talk
about.

Director Deutch, let me broach the next item on my agenda of questions
while the yellow light is on, and that is the issue of terrorism in
the Mideast. You've touched upon it with respect to a number of countries
there. The United States has made substantial commitments, as have other
countries of the world, to the PLO to rebuild the PLO territories, conditioned
on a couple of factors -- the PLO renouncing the destruction of Israel,
and the PLO renouncing terrorism and doing everything within its power
to avoid terrorism.

In your judgment, has the PLO and its Chairman, Yasser Arafat, made
every conceivable, realistic, practical effort to stop terrorism against
Israel?

DR. DEUTCH: My general impression is that the PLO has ceased to sponsor
terrorism, and I would like to provide a more detailed classified answer
to that, but my answer would be in the affirmative as a general impression.

SENATOR SPECTER: Well I understand your use of the word sponsor, but
that has a considerable gulf between affirmative action in every possible
way. But we'll await...

DR. DEUTCH: On that point I would have to inform myself before giving
you a reply, and I would want to do it later if that's possible, Mr.
Chairman.

SENATOR SPECTER: All right. Thank you very much.

Senator Kerrey?

SENATOR KERREY: Thank you very much, Mr. Chairman.

Director Deutch, given the way that we've lined this up, I may have
referenced some of the testimony that will come after you if you don't
mind, but I'd like to engage you at the start in a more general discussion.

It seems to me that it's fair and accurate to say that every military
action, since Desert Storm, taken by the United States of America has
been in response to the deterioration of some nation state. As a consequence
of that deterioration there is a political military problem that either
becomes of humanitarian interest or of vital national interest to the
United States, the most recent one being in the former Yugoslavia where
we led a negotiation in Dayton and then followed that negotiation with
a deployment of U.S. forces as a part of IFOR.

Is that the way you see the world? It seems to me your testimony,
Ms. Gati's testimony, as well as General Hughes' testimony implies that
what we're likely to see out there in the future, even in the case of
North Korea, the implication is, the possibility is that the greatest
threat may not be military, but could in fact be the implosion and the
deterioration of that nation state and what consequences that might
bring would become a threat to the United States. Is that...

DR. DEUTCH: Exactly, Senator Kerrey. My message is that's the kind
of military situations we'll face. And the other message I bring with
it is there's lots of them.

SENATOR KERREY: Does that imply that we are going to see an increasing
importance of what you might call preventative diplomatic economic efforts?

DR. DEUTCH: Absolutely.

SENATOR KERREY: In other words, deterring threats to the United States
through our own military efforts may not be as easy as it had been in
the past?

DR. DEUTCH: The threats are not only to the United States. The threats
are to peace and stability in regions of the world. But in general I
think that the military as a military activity only, by itself, is not
going to be a unique instrument for dealing with these problems, like
Bosnia, for example.

SENATOR KERREY: But it is fair to say though, is it not, that we're
not going to be able simply through... And I'm not suggesting, by the
way, that I've reached a conclusion that we ought to disassemble our
military. I'm just saying that we are going to be frustrated if we have
an expectation that the strength of our own military is going to, on
its own, provide us with the kind of security that we've expected it
to do in the past.

DR. DEUTCH: Actually, Senator, I turn that around and I say that we
have to be prepared now as a country to meld together the diplomatic,
military, and economic, humanitarian support instruments that we have
in the foreign policy...

SENATOR KERREY: Let me take an entire continent. Africa, at the moment,
where it's hard to pick up a newspaper and read a report of some country
in Africa and not pull the word, as General Hughes has done in his testimony,
"chaos." That we're apt to see chaotic situations where our
military will have no impact at all. I mean the kind of investments
that we make, the kind of training that we do and so forth in our military
is not apt to have much of an impact upon events in Africa, though you
could describe a scenario where we may have to deploy as a consequence
of that chaos, as we have done in Bosnia. In other words, the strength
of our military in Yugoslavia had no impact upon the deterioration of
Yugoslavia. It deteriorated independent of our military capability.
Our military capability was required and we had to deploy our military
capability, and I believe wisely so, inside the NATO deployment as a
consequence of the deterioration of the nation state.

DR. DEUTCH: Absolutely.

SENATOR KERREY: And it is fair to say that, as I listen to the debate
about what happened in Yugoslavia, many are of the opinion that there
might have been something that we could have done had we been wiser,
more prophetic, in anticipating the events, let's say, of 1989, '90,
'91, in that era. I mean, there's some suggestion that perhaps diplomatic
efforts might have headed that off.

I'm not asking for a response, I'm just saying... Let me tie it back
to Congress. We're going to turn over in the United States Senate 14
members, there will be 14 new members under the minimal circumstances;
there may be more new members entirely. And we're aware that statements
that we make can have an impact upon what's going on in the rest of
the world.

So it occurs to me that one of the things that we need to be thinking
about as a country is preparing ourselves to take stronger diplomatic
roles than we have in the past. Is that a fair...

DR. DEUTCH: Absolutely, sir. I cannot tell you how important it is
from our perspective to have strong and effective and certain American
foreign policy leadership in all these areas that I mentioned in the
beginning of my testimony -- in India, in China, everywhere.

SENATOR KERREY: Let me see if I can take another cut at this, Director
Deutch. What I'm saying in general terms is that throughout most of
the Cold War, we depended upon our military to protect us. We had diplomats
who were engaged in efforts, and we had intelligence efforts that were
contributing to the military's capability, but we had this balance of
power between ourselves and the Soviet Union, between the Western world
and the Soviet Union, between NATO and the Soviet forces. It seems to
me that in the post-Cold War era that we're not going to be able to
depend as much on the military. I mean after we've made a decision what
the threats are and what kind of military capability is necessary to
meet those threats -- and they're still considerable -- I'm not suggesting
that they're not considerable, I'm just saying that increasingly, it's
going to fall not just to the people's representatives, but the people
of this country themselves to understand what's going on out there in
the world, in order to be able to figure out in some, hopefully coherent
fashion, what we need to do to make the world safer.

DR. DEUTCH: Well Senator, I believe that I'm in agreement with you.
I would say that the foreign policy of the United States is going to
be successful, largely because of our diplomatic efforts. We are in
a massively fortunate time in our history where our military is strong
and our military is able to protect our interests against all the adversaries
that we can see for the future. And I don't think it's a choice of either/or.
But I do agree with you that at the present time the diplomatic efforts,
the diplomatic strength is what is tremendously important in avoiding
some of these deteriorating conflict situations that you point to.

SENATOR KERREY: Briefly stated, it seems to me that one of the things
that would alarm me, were I in your shoes, would be a willingness on
the part of the people still to presume that somehow the military is
going to bail us out of all of these problems, as opposed to investments
in the United Nations, as opposed to investments in State Department
efforts, as opposed to investments in the people's understanding of
what's going on in the world.

If we elect, let's say 14 new members of the United States Senate
who don't understand what our policy has been with China since 1949,
it's possible for us -- particularly since the Shanghai Accords of 1972
-- it's possible for the United States Senate, for example, to make
some rather stupid moves. In fact it may be possible for us even without
14 new members to make rather stupid moves.

DR. DEUTCH: Of course I could not agree with that comment, Senator.
(Laughter)

SENATOR KERREY: It may seem to some in humorous moments that we members
of the Senate have arrived here from outer space, but we've not. We've
arrived here from the country. We can only be as good as the country
itself. And one of the concerns that I guess I would have, in a world
that's becoming increasingly chaotic, in a world where power is being
diffused away from central governments, in a world where there is a
possibility of asymmetric attacks upon our interests using weapons of
mass destruction or using some other terrorist effort, that if we don't
understand and if we aren't making a full scale effort to not only educate
and prepare our citizens -- whether they're serving us here or whether
they're serving merely in the capacity of trying to decide which presidential
candidate to select it seems to me that the United States could arrive
at a point where once again we've got to send our soldiers to do something
that we should have been able to prevent in the first place.

I'm not suggesting that we could have been able to prevent Bosnia
or the deterioration of that particular nation state, but I am suggesting
that it's not coincidental that U.S. forces have been sent since Desert
Storm every single time to take action as a consequence of deterioration
of a nation state. And of all the things that alarm me, our own citizen
capacity to be able to answer questions about what's going on in the
world is perhaps the most alarming of all.

Let me ask you, Director Deutch, what your confidence level is of
being able to identify nuclear programs and to, in a preventive fashion,
be able to tell whether or not someone has the capacity to develop and
use nuclear weapons.

DR. DEUTCH: That's, of course, a very central concern that we have.
I would say that we are more confident on nuclear programs than we are
on chemical or biological programs, because it's easier to start those
kinds of weapons of mass destruction programs with dual-use technology.
Nuclear programs have the unique signature of highly enriched uranium
or plutonium, which makes it somewhat easier to track them and identify
them.

The experience of Iraq before Desert Shield, when we found that there
was a tremendous and huge program which had not been known really and
internalized by the intelligence community, gives us some humility in
this. But we have redoubled our efforts, and I would say that I am relatively
confident but not secure that we can track nuclear weapons programs
throughout the world. I would be much less confident with chemical or
biological programs.

SENATOR KERREY: So you would state that you feel confident today that
you can detect a nuclear missile program prior to its use in a military
situation.

DR. DEUTCH: You said nuclear missile. Now those are two different
things. A nuclear weapons program I'd say I'm reasonably confident,
and a nuclear missile -- a missile program -- I would say there I'm
also reasonably confident. Reasonably confident.

SENATOR KERREY: Thank you.

SENATOR SPECTER: Thank you, Senator Kerrey.

Senator Robb?

SENATOR ROBB: Thank you, Mr. Chairman.

Dr. Deutch, I don't want to beat a dead horse here, but I'm concerned
about the colloquy between yourself and the Chairman with respect to
his first question, and it may be that there is some confusion that
we should clear up here in open session, because I think the failure
to do so leaves an ambiguity that may place journalists and others at
unnecessary risk.

Is there a distinction to be made between interrogating a journalist
who may happen to have come into the possession of information that
might be useful, as you would interrogate any other potential source
of intelligence information, and a determination before any intelligence
is gathered, to place someone who is either in the employment of the
federal government as an agent of the government or with non-official
cover, whatever the case may be? It seems to me that's the distinction
that would, at least to me, be very troubling if it's not one that you
can make a fairly clean break.

If I may preface it, certainly if we can say so that journalists and
others who are working in an objective, non-aligned capacity would not
be subjected to unnecessary suspicion and perhaps other tactics that
would make their job more difficult, that we are not putting anyone
in the field with that cover, but might take the opportunity to inquire
from journalists and anyone else about information that might be relevant
to the whole intelligence-gathering process. Is that a fair distinction,
or am I off base?

DR. DEUTCH: I think the distinction is a good distinction. But I think
that what is at issue here has to do with the policy of either using
an individual U.S. journalist as a witting agent, or having a U.S. intelligence
asset use U.S. journalistic cover. Those are the two points that are
at issue, sir, the latter two points.

SENATOR ROBB: Well I think this is a matter that we as a committee
want to address in greater detail, and I don't think this is the appropriate
place to do it. I understand...

DR. DEUTCH: Senator, again, I want to come back and say I'm pleased
to hear your concern and the committee's concern on this issue. I want
to say again that I am not interested in advocating broad areas here.
I think that the journalists have a tremendously important and effective
argument and one of substance and merit. My problem is that my responsibility
is also to imagine those rare cases where our interests or our people
may be at risk, their lives may be at risk. So I have to continue to
say that I favor continuing our current, publicly-known policy since
1977 on this matter, and I think that upon reflection, many Americans
would agree with that exception. Properly drawn and narrowly drawn,
sir.

SENATOR ROBB: Again I don't believe there's anything more that I could
inquire about in open session that would be useful, but I do think that
the distinction is one that ought to be examined, and we can do so at
a later time.

DR. DEUTCH: Yes, sir.

SENATOR ROBB: Let me shift. You gave us quite a smorgasbord of areas
in the world where intelligence-gathering is of critical importance
to policymakers here in this country. I happen to have just returned
from a very brief visit to the Middle East in pursuit of additional
information about the peace process. The very small group, including
another member of this committee, Senator Inhofe, and I had occasion
to get briefings from some of the official U.S. personnel in the intelligence
community, and for that I am grateful.

Another U.S. national made a more recent trip to that region, and
his visits were not confined to the current participants in the peace
process, if you will. Minister Farrakhan has, at least according to
news media, visited several of the heads of state and others in that
particular region.

The only question I would ask you at this point is how you believe
the various countries that were visited interpreted that particular
visit.

DR. DEUTCH: Senator Robb, I have no comment on that. I don't think
it's appropriate for me to comment on the travels of an American citizen
abroad. I don't have any comment, and I have not really reflected on
it either, sir.

SENATOR ROBB: All right, I'll pursue that in a different forum then.

Let me ask you a question about China. You described very briefly
the concerns in that area, and there are many, and the relationships
with the reversion of Hong Kong, with the missile technology, with the
control of -- with the export of various items that are certainly destabilizing,
in the very least, some more assertive actions in and around the Spratleys,
South China Sea, etc., and certainly the relationship with Taiwan at
this point.

I wonder if you could characterize your view or the intelligence community's
view of the understanding on the part of the current leadership in China
with respect to miscalculation about intentions of either the United
States or any of the other regional participants. Do you think their
understanding of what would fall within the scope of permitted self
interests in terms of security and other matters is sufficient to give
us some assurance that an irrational decision would not be made with
respect to any particular activity that might take place in the arena?

DR. DEUTCH: Senator, my own view is that the current Chinese leadership
is almost completely preoccupied with two questions. The first is the
leadership transition which is taking place after Deng Xiaoping; and
the second is how to maintain political control of that enormous country
during a time of economic opening, maintain still very strict and tight
political control. All their actions, I believe, have to be interpreted
with respect to those, through those two vantage points. So when we
talk about the Spratleys and we talk about Taiwan, we should assess
them, first of all, not in terms of bilateral from the Chinese perspective,
U.S.-Chinese relations, but rather with respect to how the Chinese interpret
these things from the point of view of their internal political dynamic.
Therefore, I would say to you that we do not have an adequate common
understanding with the Chinese on these matters. Because I'm approaching
it from a different point of view, I do not believe that we have an
adequate common understanding of these issues that are dividing us.

SENATOR ROBB: But is it fair to say that you believe that the struggle
that you just indicated in terms of the top two preoccupations of China
at the moment would reasonably foreclose any miscalculation that would
create difficulties beyond those two particular problems that they're
attempting to deal with?

DR. DEUTCH: Not at all, sir, and let me give you a particular example.

We do anticipate having exercises in the Taiwan Straits across from
Taiwan by the Chinese before the upcoming election. A miscalculation
or an accident, unintended, could lead to some very, very serious hostilities
there. It's a particular example of where a miscalculation could lead
to a very serious consequence.

SENATOR ROBB: Let me move just east of that area, generally speaking,
to North Korea. Recently a decision was made to provide $2 million worth
of emergency supplies in terms of the famine and floods and whatever
have been declared by the leadership, in a somewhat unusual expression
to the outside world that some assistance was needed. There have been
a number of mixed signals.

Based on the economic intelligence that we have, how would you characterize
the situation with respect to the severity of the drought, potential
famine, flood damage, etc. in North Korea and their ability to respond
to that need internally?

DR. DEUTCH: The answer there is quite clear. We think that the economic
conditions are worsening and worsening quite dramatically, and that
they have very little capability to reverse the consequences of that
in terms of starvation and further deprivation of their people.

SENATOR ROBB: With respect to the response that they gave initially
to offers of help from the South -- the South Koreans and other regional
entities -- would you characterize the basis upon which that less than
positive response was made?

DR. DEUTCH: It's very difficult for me to do so because we do not
have, and I do not have, a satisfactory understanding of what is governing
the North Korean leadership's thinking process during this time of tremendous
economic hardship. So I cannot give you what I would consider a confident
answer to what is dominating their replies -- their response to some
of these offers of assistance. I just don't have, we do not have a good
enough understanding of the inner workings of North Korea to give you
a confident answer to that.

You mentioned the leadership. Would you care to address the reason
for not vesting two of the three titles held by his father, in Kim Jung
Il?

DR. DEUTCH: I don't. I personally do not believe that there is tremendous
significance to that. The tensions that we see, or the indications that
we see, are that he is compiling power in his own hands there similar
to what his father had. Especially with the military.

SENATOR ROBB: Would it be reasonable to assume that the second anniversary
of his father's death might be an appropriate time to vest those particular...

DR. DEUTCH: We'll have to watch, sir. I can't. I don't have any information
on that.

SENATOR ROBB: My time is up, Director Deutch, and I thank you.

DR. DEUTCH: Thank you, Senator.

SENATOR ROBB: Thank you, Mr. Chairman.

SENATOR SPECTER: Thank you very much, Senator Robb.

Director Deutch, I know you are well aware of the fact that if any
of the questions go beyond what you feel comfortable with, we can reserve
them for a closed session, but I think it appropriate to comment for
the record that we're aware on this side of the podium of that limitation.

I now want to take up with you questions of the national reconnaissance,
the NRO, and the concerns about the NRO having so much more money available
than this committee and the Congress generally understood them to have.

This ties into the overall issue as to how much secrecy is necessary
for the U.S. intelligence community. Not too long ago the Senate passed,
by a slim margin, an amendment to make public the total figure of the
intelligence community. That was changed in a conference report. I believe
that you have testified, or perhaps let me just ask you, what is your
view about the propriety of making public the bottom line figure of
what the appropriations are for the U.S. intelligence community?

DR. DEUTCH: Mr. Chairman, I am well aware of this debate, and it's
happened in the past. I am looking forward to the recommendation of
Harold Brown's panel on this question. I think a group of outside Americans
of great probity, including some members of Congress, have served on
that commission, and my intent would be to allow my thinking to be influenced
on what their recommendation is on this point. I believe that they will
be making a recommendation, and I'm inclined to go with it. We should
know what their recommendation is here on March 1st when their report
is made public.

So if I could, sir, I would say to you that that is going to heavily
influence my position.

SENATOR SPECTER: You have some thinking on the subject at the moment
don't you, Dr. Deutch?

DR. DEUTCH: I have testified on the subject. I think the way I've
testified on the subject is that I do not believe there is any great
loss by making the top line of the Defense Department's budget public,
but there has been some heated questioning from members of your committee
about the ability to hold the line there and not have additional information
on sub-categories of the budget also made public, and at that point,
I think one would run very serious risks of revealing sources and methods
which would not be helpful for the country's national interests. So
the top line, yes; below that, no. The overall budget...

SENATOR SPECTER: The overall budget for the U.S. intelligence community?

DR. DEUTCH: Yes, sir. Yes. And then going below that, no, has been
what I've testified to in the past, and I've received very heated questions
from members of this committee about whether that's plausible that one
could maintain such a position, but I would leave that to Congress'
judgment.

SENATOR SPECTER: Why do you say that a disclosure of figures for the
national intelligence community would be involved in sources and methods?
We have a very serious issue with the NRO, and it is illustrative with
the problem of secrecy. If there is a reason for secrecy, then we ought
to observe it; but I believe we're going to have to do more than simply
generalize on sources and methods. But perhaps the best way to approach
this subject within the confines of our time restrictions today is to
talk about the NRO.

Is there any reason why the public should not know how much the National
Reconnaissance Organization had in its account that was excessive?

DR. DEUTCH: Mr. Chairman, first of all, I could not agree with you
more that secrecy is not -- cannot -- be used as a cover for poor management
and for poor financial management, in particular. But there is a very
good reason why the National Reconnaissance Office budget has been maintained
secret from year to year, and that is by tracking that budget over time,
it would be possible, depending upon what level of detail, but even
in the top line, the number of national reconnaissance satellites that
are launched. That is not a subject which I think should be publicly-known
-- the number or types of satellites that are launched.

So I want to absolutely associate myself with you and with the members
of this committee, the minority member especially, that financial --
lack of financial quality management is not permissible because a program
is secret. But I also believe that going below the top line will begin
to, getting finer and finer in detail, give information about the kinds
of intelligence efforts that we have underway that will not benefit
our national security.

SENATOR SPECTER: That's a marvelous answer, Dr. Deutch, fit for the
Manchester debates in New Hampshire or the ones coming up in Arizona,
but I don't think you've come near my question.

My question is, is there any reason to conceal the excessive amounts
the NRO had. Now I'm not talking to you about mismanagement...

DR. DEUTCH: The excessive amounts...

SENATOR SPECTER: Excuse me, excuse me. I'm not talking to you about
mismanagement, and I'm not talking to you about their overall budget
which might give some insights into the numbers of satellites launched,
which I want to pursue with you because I don't see a necessary connection.
Let me candidly state to you that too often when we get into these discussions
we come up with sources and methods and we come up with items about
satellites launched, and we come up with generalized national security
issues. But we have seen in a free society when the facts and figures
are on the table, there are many people who take a look at it. It's
available under the Freedom of Information Act so that citizens can
take a look at it; it's available for investigative reporting; it's
more available for congressional inquiry. There's simply not enough
inspectors general or members of oversight committees or directors,
even as competent as directors are, to take a look at all of this.

Now coming back to my question, how they had excessive funds, the
NRO did. Is there any reason why the American people should not know
the figure of the excessive funds? There's been a lot in the newspapers.
Any reason why we shouldn't tell the American people how much excessive
funds the NRO had?

DR. DEUTCH: The reason that one should not do that, Mr. Chairman,
is that by itself -- by itself -- that single figure does not place
in perspective what the size of the program is and how that program
is financed and how that event occurred, as inappropriate as it was.

SENATOR SPECTER: But you're saying that...

DR. DEUTCH: So, the American people will not have the correct impression
of the National Reconnaissance Office from only revealing that single
figure. That figure has to be seen in context to understand how it happened,
where the money built up, what has been done about it, because it has
been -- by the Department of Defense and my myself -- put back and given
back to Congress when it was not needed and placed back in a program
where it was needed. And to give you more...

SENATOR SPECTER: Director Deutch, I don't want to interrupt you unduly,
but we're not getting to the point.

DR. DEUTCH: Yes, sir.

SENATOR SPECTER: We're not on the point about what you've done or
what the Department of Defense has done. I'm on the point as to why
the American people shouldn't know what the excessive amount was.

Now you've said the total budget of the NRO ought not to be known
because it might have some indication as to the number of satellites
set off. I don't know why that is and we'll come back to it. But then
I say how about the number in itself and you say well, we shouldn't
disclose that because without knowing what the overall budget of the
NRO was, we shouldn't say what the excess was. I don't understand that
answer at all.

But suppose it were a trillion dollars. Suppose it is so excessive,
which I believe it to be, and has independent standing all by itself.
I haven't asked you yet what the figures is, and I haven't decided whether
I'm going to ask you what the figure is...

DR. DEUTCH: I'm thinking.

SENATOR SPECTER: ...because I want to hear for the record what your
reasons are that the total figure ought not to be announced.

Now if you say you shouldn't announce it because you can't -- it doesn't
have any understanding in the absence of knowing what their budget is,
and then you can't tell us the budget because of the perhaps disclosures
of satellite launchings, what you're saying is you can't say anything.

DR. DEUTCH: Mr. Chairman, I will be very candid with you. I think
you can't tell a story with one sentence. You can't just say that...

SENATOR SPECTER: We haven't asked you to do that.

DR. DEUTCH: My point is, Mr. Chairman, that that number by itself
will provide a misleading impression to the American people. Your judgment
has to be do you want to tell them everything about the National Reconnaissance
Office, not just one isolated fact, I must say, a fact which is very
damaging and not something that I condone. But the question is do you
give a full impression or one number? I would argue to you you have
to make the decision to give them a full story, but one number alone
is misleading. That's my position...

SENATOR SPECTER: What's the damage to national security if someone
knows how many satellites have been launched?

(Pause)

DR. DEUTCH: I think that there is an answer that I would want to give
in a classified setting. But let me tell you, that knowledge of where
satellites are and how many there are allow people to take actions to
deny or deceive those satellite operations. So there's great merit to
not having people know the nature of the satellites, where they are,
or how many there are. Because...

SENATOR SPECTER: The nature and where they are are totally different
from how many there are.

DR. DEUTCH: No, but the point is, all three variables are important.

SENATOR SPECTER: The budget doesn't necessarily tell you where they
are. It tells you... How does it even tell you how many there are?

DR. DEUTCH: Estimates can be made, and it is the variations in the
budget that will tell you about launch rates and the like. Again, it
depends on how much you know.

SENATOR SPECTER: How likely is it that somebody is going to figure
it out, and how likely is it that that's going to harm national security,
compared to a live example of the NRO having flagrantly excessive amounts
of money which have been accumulated because of our rules on secrecy?

Dr. Deutch, my red light is on and I'm going to stop, but I think
that you and the intelligence community and this committee have got
to do a much better job in coming to grips with the hard reasons for
this security, if they exist. And if they exist, I'm prepared to help
you defend them. But I don't see that they exist. I don't think they
have been articulated or explained. And as you know in this hearing
there was a suggestion that we ought to have the NRO people in here
because the consequences of having the NRO secrete a tremendous sum
of money are minimal.

Has there been any shakeup in the leadership of the NRO so far?

DR. DEUTCH: No.

SENATOR SPECTER: What has happened... Well, I'll get into this in
the next round as to what has happened in the NRO. But one of the therapeutic
qualities of the hearing process is for oversight hearings to come in,
bring people in, and say what happened, and why did it happen, and explain
about it on C-SPAN. Then other people who might have similar inclinations
might want to avoid explaining about it on C-SPAN. And when the light
shines in, it's the best therapy of all about having it avoided. I personally
am very dissatisfied with what little the public knows about the NRO.
I even wonder how much I know about the NRO. I won't go so far as to
say I wonder how much you know about the NRO, but I would go so far
as to say that we found out the NRO didn't know very much about the
NRO.

DR. DEUTCH: I should tell you, sir, that I am very concerned about
what I knew about the NRO, because I would have expected to have been
told more -- either as Deputy Secretary of Defense or as Director of
Central Intelligence. I think...

SENATOR SPECTER: Did the NRO itself even know how much money it had
squirreled away?

DR. DEUTCH: Well, they certainly knew the size of these accounts.
They certainly did, as was reported to Congress on every occasion. They
reported to Congress. The problem was that they did not propose actions
consistent with these large balances.

Let's remember, these balances were reported every year to Congress.
The issue was did they draw significance when they were asking for new
appropriation to the existence of these large balances, these excessive
balances.

SENATOR SPECTER: How about to the DCI? They were reported to the DCI
too, weren't they?

DR. DEUTCH: They absolutely were, and they should have been reported
to the Deputy Secretary of Defense. They were not. Or they were not...

SENATOR SPECTER: They weren't reported to...

DR. DEUTCH: Sorry, let me put it differently. We certainly did not
see them. We did not act on it.

SENATOR SPECTER: Well, they had good reason not to report them to
the Deputy Secretary of Defense.

Senator Kerrey, your turn.

SENATOR KERREY: Dr. Deutch, actually I've been interested in getting
to the couple of witnesses that are going to follow you. I would concur
in much of what the Chairman has just said. I do, myself, believe not
only the top line but several of the other lines of the budget not only
could but should, for the purpose of giving taxpayer citizens confidence
that their money's being well spent. Indeed, I've spoken with you and
I've spoken to the citizens at home about the remarkable success of
the Corona project. Now that we know what Corona has done, it's easy
for us to see the connection between those early electrical-optical
efforts and the policymakers' ability to be able, for example, to conclude
that preemptory nuclear attacks were unnecessary, that the Soviet nuclear
program is smaller than what we had initially thought. In other words,
that there is a connection between the intelligence and our efforts,
and that very often those connections aren't seen as a consequence of
the secrecy that unquestionably is needed in many cases.

But I do think, and particularly in the post-Cold War era, that increasingly
we're going to have to justify these expenditures to taxpayers. And
I think it's getting harder and harder to do it. The stories about the
NRO have largely used phrases such as "slush fund" and "money
wasted" and so forth. We know that money wasn't spent. We know
that in fact repeatedly, over the past couple of years, there have been
public disclosures of instances where the efforts of the NRO, whether
it's the identification of the North Korean nuclear program or the identification
of Saddam Hussein's violation of the sanctions -- violation of the Security
Council's agreement, or providing our diplomats with the information
they needed to get a good agreement at Dayton, that time and time again,
or for that matter, whether it's providing you with the information
that you need and that others need to come to us and say, in an open
session, here's what we think the threats are.

So I think that the look at this Corona project in an open way has,
at least for me, enabled me to do a better job of going home and saying
okay, this is open now. Look at what it did for the period of time in
the 1960s and '70s when it was operating, look what it did for your
safety and your security, look at the lives that it saved, look at the
dollars that it saved, and so forth. You can show it in an open fashion
and it gives people confidence. Whereas in an environment of excessive
secrecy, and I just think it's very difficult to make the case, and
you're not making the case that the overall budget should be withheld
from the American people, I think it's increasingly difficult to withhold
other lines.

If we have a case to make that sources and methods need to be protected,
I'm 100 percent with you. Let's protect sources and methods. Let's not
reveal something that's going to make it counterproductive and difficult
for us to carry out the missions of your agencies or other intelligence
agencies.

Mr. Deutch, I don't want you to respond to it right now, because I
do want to get to the other witnesses, and I know you would like to
leave as well. But I am very much concerned about your views, and I've
gotten them privately and would like to get them on the record prior
to the recommendations of the Brown Commission as to what additional
powers you think you need.

I do think that President Clinton has provided the nation with an
historic opportunity, given your relationship with the Secretary of
Defense, given your understanding and knowledge of the technology, I
think the President has given the country an historic opportunity to
change our laws so that in the future, given that we are a nation of
laws not of people, not of personalities, that if we change our laws
today, that we might be able to provide future DCIs with the kind of
authority and power that they need in order to be able to do the sorts
of things that you're identifying need to be done in your testimony.

DR. DEUTCH: Senator Kerrey, I look forward to that discussion with
you and other members of the committee. I'd like to say something to
you and to Senator Specter.

I am perfectly happy to enter into a discussion about how much of
these activities should become declassified, these financial programs.
That is an absolutely legitimate question for you to pose. As usual,
Mr. Chairman, and Senator, you make your case on this very well, and
I will be happy to discuss that with you. Perhaps we should move more
in that direction, and I look forward to continuing discussions on this
point of how much of the program should become unclassified.

I also appreciate, Senator, your remarks about the NRO. They have
done tremendous things for the country. The only thing you left off
your list is they also have shown ethnic cleansing in Bosnia from their
efforts from satellite photography. So it's a great organization, but
I look forward to discussing with you and the Chairman how far one should
go here. I take your point, Mr. Chairman and Senator.

SENATOR SPECTER: Senator Robb?

SENATOR ROBB: Thank you, Mr. Chairman. I, too, will be brief because
I'm looking forward to hearing the other witnesses, and I do thank you.

Just a couple of items that I think are appropriate for discussion
in open forum. We talked a little bit about the situation in China.
I don't believe we've made specific reference to the relationship, between
Russia and China at this point, the warming of that relationship and
what that portends. Could you comment briefly on where you believe that
is headed and what implications it may have for U.S. policymakers?

DR. DEUTCH: Well, I will just mention two. I think you're correct
to note a warming of political relationships. There is also an increase
in trade, military armament supplies from Russia to China, and I think
that is probably the most significant aspect of the warming of those
relations. I don't see them taking place in the near term or for the
foreseeable future in a way that would really lead to a strategic realignment,
but they are providing the Chinese with advanced conventional weapons
such as modern fighter aircraft that they couldn't have access to elsewhere.

SENATOR ROBB: Let me ask you one other question, speaking about the
analysis of Russia. It reminds me there was a fair amount of criticism
of the intelligence community's economic analysis generally speaking,
but specifically pertaining to the former Soviet Union. One of our colleagues
not on the intelligence panel has had more than a little to say about
the accuracy and usefulness of some of the economic intelligence activities,
and certainly the analytical portion.

Is it your sense at this point that the community has the kinds of
resource-gathering agents, entities, at its disposal to give a fairly
accurate economic analysis of virtually any of the areas or countries
or regions in the world, or do we need to think about some other means
of obtaining some of that information, much of it, obviously, available
in a public forum on a regular basis?

DR. DEUTCH: Well, our analytic capability and economic analysis of
nations is completely dependent on how open they are and how well they
conform to international standards of statistics production. Little
of it, but sometimes important parts of it, are influenced by clandestine
intelligence-collecting. So our efforts to, for example, monitor economic
change in Russia is much improved by the fact that they're a more open
society. But there are countries in the world where we still have very
important absence of information which we would need to make the kinds
of economic assessments that we would...

SENATOR ROBB: Could it be summarized as "trust but verify,"
a term that is familiar from that recent past period?

DR. DEUTCH: Yes, I think that's an interesting way of putting it.
The more that it's in the public, the better off we are in our estimates.
Occasionally we have some clandestine information in particular circumstances
which are important. But trust plus verify is a good way of putting
it, Senator.

SENATOR ROBB: One last little matter, it's not a little matter, but
one specific item, that with respect to the presence and strength of
the Iranian Republican Guard in Bosnia, there have been newspaper reports
on that topic. What can you tell us in open forum about that situation
and how it is progressing, given the fact that under the terms of the
Dayton Agreement they were all supposed to be out mid January.

DR. DEUTCH: Senator, that's exactly right. Under the terms of the
Dayton Accord, the Bosnian government had the responsibility for getting
rid of the Iranian Republican Guards which are there in Bosnia. We continue,
I continue to be absolutely concerned about this matter. Not a day goes
by that I don't discuss the progress that is being made with at least
the Secretary of Defense and the Secretary of State. So I consider this
still a very, very important matter with respect to the safety of our
troops and the IFOR troops in Bosnia.

SENATOR ROBB: How confident are you of our ability to monitor that
situation accurately?

DR. DEUTCH: I'd rather take a pass on that, sir.

SENATOR ROBB: I understand and I think I won't pursue any other questions
at this time.

Mr. Chairman, thank you.

SENATOR SPECTER: Thank you very much, Senator Robb.

Director Deutch, turning to the War Crimes Tribunal in the Netherlands,
at the outset on this subject, I thank you for your cooperation.

Senator Shelby, who is the presumptive Chairman next year, if we have
a Republican Majority, and I had occasion to travel together recently,
and the final stop on our trip was in the Netherlands at the Hague to
talk to the prosecutors on the War Crimes Tribunal.

There is the potential, I think, for an enormous achievement in establishing
a War Crimes Tribunal as a prelude to having an international criminal
court, which institutionally could be the event of the century, if we're
able to carry it through. A good bit of the success is going to depend
upon the ability of the U.S. intelligence community to provide key evidence,
which may be usable against some very key people.

I wrote to you on January 18th after we had had a chance to talk on
January 5th, which was just a day after the day I got back, having had
a meeting just the day before, on January 4th. And it is a very touchy
situation internationally, because to carry out the Dayton Accords there
has to be cooperation from Serbia and there has to be cooperation from
the Bosnian Serbs, and there's a very unusual situation where the President
of the Bosnian Serbs, Radovan Karadzic, is under indictment, as is the
military leader of the Bosnian Serbs, Ratko Mladic. The current arrangement
is a curious one where the Dayton Agreement provides that the NATO forces
will not seek out these individuals under indictment, but if the NATO
forces come upon them, they will be taken into custody and turned over
to the War Crimes Tribunal.

Recently there was an international incident where two men were turned
over to the War Crimes Tribunal not under indictment, with the conclusion
being that if the War Crimes Tribunal had them under indictment they
could be turned over. That, of course, has an enormous potential impact
on the cooperation of the Bosnian Serbs and Serbia generally.

My question to you, before getting into the intelligence aspect, is
a broader one, and that is, what is our overall capability to gather
intelligence in support of indictments already issued against these
two top Bosnian Serbian leaders? So there's already sufficient evidence
for an indictment, but the prosecution team there wants to have what
they call a Rule 61 hearing for the international criminal court, and
that takes more evidence.

Could you comment on that issue?

DR. DEUTCH: First, Mr. Chairman, as I've mentioned to you and it's
certainly the policy of our government, the assistance that we can provide
to the War Crimes Tribunal from intelligence is going to be given. That
is something that I've stressed and I think is very important for the
same reasons that you do.

I do not believe that it is likely that we would find, and we have
looked, or could collect material which would be compelling in a legal
proceeding. That is not the kind of information that we would normally
be able to get. Were we to come across it, we would provide it.

SENATOR SPECTER: It would be corroborative evidence when you talk
about the grave sites far removed from the battle lines, so that there's
no question about those deaths having been inflicted in combat.

DR. DEUTCH: We are perfectly in a position to provide that information
and we, as far as I know, and I've spoken to Justice Goldstone just
a couple of weeks ago, I think that this is not only being provided
in a way that they find useful for their investigatory efforts, but
also we have a process in place which would allow them to use that information
in a legal proceeding in a way that is appropriate for them. So I think
this is on track. If we've had information about Karadzic or Mladic
or we had corroborative information and they requested it, or we thought
it would be useful, we would hand it over to them.

SENATOR SPECTER: I thank you for your statements, and I think it is
very important that the international community, including the parties
to the Dayton Agreement, understand the determination of the United
States in pursuing these prosecutions with the War Crimes Tribunal so
that justice will be done against these atrocities and the acts of genocide.

President Clinton called me before the vote on the resolutions on
Bosnia to talk about Senate support, and I had occasion to talk to him
about the War Crimes Tribunal, and he is four square behind them from
what he said to me privately, and what he has also said publicly. I
believe that the likelihood for congressional support for what is going
on today will be enhanced by vigorous prosecution of these cases. It
is my hope that some members of the intelligence committee will have
an opportunity to visit Bosnia. There's an effort to limit the number
of trips there so as not to interfere with the military operations,
but this committee has already been active in supporting the prosecutions,
and we intend to pursue it and we appreciate your cooperation.

Let me move quickly to a number of other subjects, because there is
so much to talk about and so limited an amount of time. I want to pick
up the question of China, our intelligence-gathering facilities, the
issue as to what's happening with China and Taiwan.

Last summer the People's Republic of China test-fired short-range
ballistic missiles near Taiwan, and last fall it conducted military
exercises which had every indication of being directed to intimidate
Taiwan right before their parliamentary elections.

We have the issue of China's having agreed to abide by the provisions
of the missile technology control regime, yet last year Secretary of
State Christopher commented publicly about a large body of evidence
that China had sold M-11 missiles to Pakistan. Now there are reports
of China selling missiles to Iran and transferring nuclear weapon technology
to Pakistan.

Picking up on the Taiwan question first, I believe it is very important
that the People's Republic of China not misunderstand U.S. resolve that
Taiwan not be militarily attacked or intimidated. What is your assessment,
to the extent you can disclose it publicly, about the intentions of
the People's Republic of China with respect to their belligerent activities
toward Taiwan?

DR. DEUTCH: Mr. Chairman, there's been a military buildup in the area.
We follow it and monitor it extremely closely. I am not only concerned
about Chinese intentions against Taiwan or some of the smaller Taiwanese-held
islands in the area, but I'm also very concerned that in their process
of carrying out exercises in the area before the Taiwanese election,
that by accident or miscalculation an event occurs that could bring
hostilities.

So I would just say to you this is a matter which the community is
following on an interagency basis, extremely closely on a minute-by-minute
basis.

SENATOR SPECTER: Because of the sensitivity of that subject I will
not pursue it further, but I think it's important to have that public
statement about U.S. concern and about U.S. following it very, very,
very closely.

Then you have the proliferation issue. What is happening there, again,
Director Deutch, to the extent that you can publicly say? Because if
the reports are accurate, it seems to me that we ought to be taking
very stiff sanctions against China. It's a tough issue, given their
psychology and the nuances of international relations, but if we don't
show them we mean business about the laws on sanctions which the Congress
has enacted, then it's open season on the proliferation of nuclear technology.
What do you think?

DR. DEUTCH: Mr. Chairman, the intelligence community continues to
get accurate and timely information on Chinese activities that involve
inappropriate weapons and military technology assistance to other countries--nuclear
technology to Pakistan, M-11 missiles to Pakistan, cruise missiles to
Iran. Our job is to obtain this information and provide it to our policymakers
in this country to make a determination on what policy actions should
be taken. I would say that the community is doing its duty here and
doing it well and clearly.

SENATOR SPECTER: Director Deutch, I turn now to some reports we've
had about espionage by foreign governments which are inspired by ethnic
considerations and by relying on ethnic groups in the United States.

By letter dated January 31st of this year, Senator Kerrey and I wrote
to Defense Secretary Perry calling his attention to a DOD memorandum
which states, quote: "The strong ethnic ties to Israel present
in the United States, coupled with aggressive and extremely competent
intelligence personnel, has resulted in a very productive collection
effort."

The memo goes on to say, quote: "Many of our military friends
are our economic industrial threat. Some of these countries we deal
with on a day to day basis" and then parenthesis, referencing France,
Italy, Israel, Japan, Germany, United Kingdom, etc.

There are six incidents cited in the memorandum related to Israel,
which strongly suggest that it is more than a casual memorandum, although
the Department of Defense issued a generalized disclaimer saying that
it was the view of somebody fairly far down the line... No incidents
specified as to France, Italy, Japan, Germany, the United Kingdom or
any other country.

My question to you is... Well, I'd like your comments about the situation
generally. We're still awaiting an answer from the Secretary of Defense.
I would have thought that on a matter of this urgency we'd have one
within three weeks, but since we don't, I'd like your comments on it.

DR. DEUTCH: First, I want to say, Senator, that this memorandum did
not come from any part of the intelligence community. It came from another
organization in the Department of Defense, I believe industrial security,
if I have the correct reference in mind.

SENATOR SPECTER: Were you the Deputy Secretary of Defense at the time
the memorandum was issued? I ask that only because of your disclaimer.

DR. DEUTCH: No. Probably. (Laughter) Probably.

SENATOR SPECTER: Well let's not focus too heavily on lines of command.

DR. DEUTCH: But it is a terrible document, simply put. It is a terrible
document because it makes assumptions about how individual Americans
might act, which I think is inappropriate. I think that the response
you will get from the Department of Defense will be of the same nature.

It is also true that we do have a counterintelligence responsibility
to monitor what other countries actually do in this country to try and
inappropriately penetrate our national security effort, facilities or
our national security operations, and we do take that very seriously.
But the kind of counterintelligence assessment that we would give you
is of a quite different nature than is contained in this memorandum.

SENATOR SPECTER: Senator Kerrey and Senator Robb are anxious to question
others. I wonder if I might ask just two more questions, and let the
Director go, or do you want to proceed now by...

SENATOR KERREY: Well, Mr. Chairman, one of the things... I appreciate
Director Deutch, your wanting to lead off and take responsibility, as
you always do, but what I find, particularly in reading General Hughes'
testimony, is some very provocative suggestions that I think are important.
Now maybe General Hughes is wrong. It would be the first time that he's
wrong. But he's done exactly what I was hoping would occur on repeated
opportunities to get an assessment of threats, which is to sort of say,
okay, this is the way we've done it in the past, but the world's changing
on us, and if we're trying to not just figure out what are the threats
today and discuss current events, but what are the threats going to
be 10 to 20 years from now, which is what we're going to be facing with
the kinds of investments we're making today, we're basically building
tomorrow's technology today and developing tomorrow's people today.
That's been said enough times and it doesn't need to be repeated. But
it's tomorrow's threats that are as big an issue as today's, it seems
to me, as we try to decide what our budget's going to be and how we're
going to appropriate money and all those kinds of things that we're
going to be doing follow-on this year.

I see in his testimony, for example, some things I'd like to ask you
about as to whether or not you see the world the same way, as opposed
to merely following on and hitting General Hughes with the questions.

For example, repeatedly throughout here in the testimony, there are
-- and I presume you've read it. Am I on safe ground here? And I'm not
trying to get a battle going. I'm merely trying to inform myself. I'm
trying to get a sufficient discussion going here that I can make good
judgments.

As I read this, for example, one of the things that I hear myself
saying is that I should direct an increasing amount of attention to
economic issues, and to the whole question of what our foreign aid looks
like, as opposed to merely trying to figure out what kind of satellite
to build or what kind of authorization to give you throughout all the
intelligence agencies. I hear myself saying, for example on page 17
of the testimony, I think a rather remarkable beginning under terrorism,
"Defining terrorism in the future is going to prove increasingly
difficult." That's how it starts off on page 17. And follow-on
on page 18 it says, "As a result of increased economic disparity,
we can expect to see increasing alienation and a growth in related terrorist
activities."

That seems to be positing a cause here. I don't want to get into a
discussion as to whether or not that's the only cause, but do you, Director
Deutch, see economic, in the future, as you look into the future, do
you see this kind of diffusion of power that General Hughes is suggesting,
this kind of possibility that chaotic events that we currently don't
even have on our radar screen, could emerge on our radar screen in the
future and produce problems for warfighters that may have to go in after
the fact? That's what I was suggesting earlier with Bosnia.

Nobody in 1990 had Bosnia on the screen, or at least very few people.
I doubt that it was part of the threat assessment at the time, and yet
we've got 20,000 troops over there today.

So do you...

DR. DEUTCH: First of all, we are enormously fortunate to have General
Pat Hughes as the new Director of the Defense Intelligence Agency. I
have the highest regard for him, and I, with you, have found him rarely,
if ever, wrong on any subject. So we should listen to him with the greatest
of attention. He not only has practical background, he does have this
ability to cast things in important ways. That's the first thing I want
to say.

The second thing, and right on the point that you were mentioning,
I've been absolutely, I think, consistent with Pat Hughes on the kinds
of threats that we're going to have in the future, of which the terrorism
that you mention is one and it's certainly something that I've been
very vocal about, that terrorism is a growing threat to the international
community, not just to the United States.

I don't believe that the source of that terrorism comes only from
economic forces. It comes from other forces as well -- ideological and
extremist ideological trends.

But I also believe that when our military forces are used, as we've
seen in Haiti, as we saw originally in Somalia, and as we've seen in
Bosnia, they are coming in a situation, as I've said here and publicly
elsewhere, not just military force alone, but coming together with the
need to provide economic and humanitarian assistance and diplomatic
efforts as well. I think that we are giving a consistent message here
from all parts of the Administration, whether it's the intelligence
community or the military or the Department of State on these issues.

SENATOR KERREY: Let me follow on two additional questions. I apologize
to General Hughes for asking you about his testimony, but it is very
provocative testimony. I'm hoping to get this kind of testimony offered
today.

General Hughes says on page seven, "There are those who speak
of China as a future peer competitor of the United States. In our view,
this would be possible only in the very distant future, certainly beyond
2010. At best, China is going to enter the new millennium with relatively
small but key portions of its force equipped with late generation equipment.
Much of the force will still be very old. It remains to be seen how
successful this military will be in the assimilation of newer technology."

That suggests a sizing of China's problems is largely a political
problem. Perhaps a miscalculation in regards to Taiwan, perhaps provoked
by us. That's why I suggested earlier that if members of Congress don't
understand what our policy towards China is, what's in the Shanghai
agreement specifically, it's possible for us to take action that could
provoke China, that could create the very thing that we're describing
that we want to try to avoid.

So if this sizing of the threat is accurate, then it seems to me that
we need to be talking about China in different terms than sometimes
is done.

I mean I've heard China described as a threat to the United States.
Do you think that China is a threat to the United States?

DR. DEUTCH: A military threat to the United States?

SENATOR KERREY: A military threat to the United States.

DR. DEUTCH: It certainly has missile systems which can be a threat
to the United States, but in terms of conventional military power, no
it is not.

SENATOR KERREY: So you think that it's military capability is not
a threat to the United States; it's missile capability could potentially
be a threat to the United States; but in general terms, do you think
it's much more of a political threat to the United States...

DR. DEUTCH: Yes, that's what I think I testified to in providing you
a range of situations -- other than that China is not a threat to the
United States. It's a threat to world stability, though -- running through
what are the concerns that we see about China. They range from providing
assistance to other countries and gaining weapons of mass destruction...

SENATOR KERREY: In another piece in here, General Hughes says that
"the prospects for the existence of a viable, unitary Bosnia beyond
the life of IFOR are dim." And then goes on to list a number of
problems that are in here.

He does not suggest by that that IFOR won't still be a success. He
does not suggest by that statement that IFOR is a waste of U.S. effort.
It most unquestionably, in my mind, will not be a waste of effort, simply
because the statement that the prospect for Bosnia beyond the life of
IFOR, as he states in here, are dim.

Is that your own view, that the American people should not expect,
given the current situation on the ground, that Bosnia as a unitary,
viable nation will survive?

DR. DEUTCH: I don't know enough, Senator, to reach that conclusion
today. I would not express it that way, no, sir. But I think it depends
on what happens between now and when IFOR goes a year from now.

SENATOR KERREY: Certainly it's a goal of the President and the United
States to have Bosnia survive as a...

DR. DEUTCH: That's correct, and we would hope that our political and
economic efforts would make that, as well as the good will, if you can
call it that, of the people of former Yugoslavia, that we would influence
that, yes, sir.

SENATOR KERREY: Do you believe that the list of things that have been
identified in General Hughes' testimony comports with the sorts of things
that we ought to be concerned about, if we as a Congress want to support
the Administration's effort and NATO's efforts to achieve a viable,
unitary nation state in Bosnia? The efforts of the Muslim-led government
to assert authority over the whole of Bosnia will be aggressively resisted,
which we're obviously seeing in the suburbs now with the evacuation,
and the Bosnian Serbs' decision to evacuate, and to urge the Bosnian
Serbs to leave the suburbs... Are these the sorts of things that you
think that we should be...

DR. DEUTCH: Absolutely, sir. We are seamless in our views on what
is of concern in Bosnia.

SENATOR KERREY: On page 16 of the testimony, again, there's what I
consider to be a very provocative statement, and I personally think
an accurate statement, but one that I'm tempted to follow along as well.
It's easy to have someone get up and describe a threat, and the next
thing you know, the audience is saying gosh, that sounds pretty good,
they've got their facts right, they sound pretty good, they seem to
be getting it right, maybe we ought to spend 4 or 5 or whatever billions
of dollars in order to defend against that threat. That's part of the
problem in the post-Cold War era, is that threats aren't as clear as
they used to be.

But in the testimony, he said, "I would recommend the committee
be leery of anyone who appears to be emphasizing a particular Russian
system or appears confident that that system will be fielded in militarily
significant numbers." Again, General Hughes does not say that Russia
is not a threat. He's simply describing in this particular context their
capability, their economic capability, of being able to develop any
particular weapon system. In the testimony he said that "Russia
will stay in START I." DIA's public assessment is that they're
not even sure economically if "Russia can build what is necessary
to meet the requirements of START II even if START II is not ratified
by the Duma."

So even if START II is not ratified by the Duma, the question is whether
or not Russia's got the capacity to build and maintain the level that
would be required under START II, and thus, in that context, one of
the conclusions is that the committee should be leery of those who would
take a particular weapons system that could be a threat to the United
States, if that's all they were building, if that's the only thing they
were working on. But in the context of their general economic condition
and their general inability to train and so forth, that we should be
leery of someone who would take a particular weapon system and build
that up as a threat to the United States. Would you agree with that?

DR. DEUTCH: Yes.

SENATOR KERREY: One statement that was made in regards to North Korea
earlier on page five that I've got some questions about, is that the
"military posture in North Korea remains very dangerous."
I've got some questions as to whether or not the military of North Korea
is very dangerous. Do you agree with that statement, and if so, why?

DR. DEUTCH: There's no question that I agree with that statement.
But I want to make a very important point here about the North Korean
military posture which I believe my friend Pat Hughes would fully subscribe
to. We traditionally think of the military threat from North Korea as
being an all-out invasion of the South. But that's not the only military
incursion that could take place. Because of the growing instability
and uncertainty in that country, one could find the North Koreans taking
actions that were short of a major invasion of the South, which would
present us with a tremendous problem but be short of an all-out invasion
of the South. We have to be prepared to deal with those kinds of situations
as well. And they can do so very quickly. That is, we would not have
a lot of warning before such an event took place.

SENATOR KERREY: Dr. Deutch, I would indulge the Chairman just to give
a 60-second editorial which you've heard before. My first round of questioning
that I was engaged in with you suggests something that you and I have
discussed before, which is that I believe that democracy functions the
best when the citizens are informed, as a fundamental principle; and
secondly, I tend to be pretty aggressive when it comes to informing
the citizens; and thirdly, I am deeply concerned about our capacity
to make foreign policy decisions -- not only if we do not use the technologies
that we have that enable us to inform the citizens, but if we don't
come to the citizen aggressively and say don't count on your military
defending you. The military is strong, we're going to keep it strong,
we're going to keep it well-trained, we're going to fund it, we're going
to build and supply it with the best technology that we possibly can.
But the first line of defense is an informed citizen. As I look at the
array of things, particularly the transitional difficulties that we
face today, it falls upon the people of this country to make the effort,
rather than merely trusting that somehow members of Congress or our
military are going to get the job done for them.

DR. DEUTCH: I understand, sir.

SENATOR SPECTER: Thank you, Senator Kerrey.

Senator Robb?

SENATOR ROBB: Thank you, Mr. Chairman.

So as not to make the testimony of General Hughes and Secretary Gati
anticlimactic, I will not interrogate you about their testimony at this
time. I have constraints, and I look forward to hearing you.

A follow-up to the question that was posed by the Chairman relating
to M-11 and Pakistan and China -- there has been a great deal of public
comment on this question. You indicated you had provided very detailed,
precise information, or that you were capable of monitoring it, whatever
the case may be. You didn't respond to the ultimate question. I'm not
even going to ask you the ultimate question, but may I ask you, have
you provided specific information to the executive branch on that question?

DR. DEUTCH: Yes.

SENATOR ROBB: Is there any ambiguity in the information that you have
provided to the executive branch?

DR. DEUTCH: There's always some ambiguity, sir. There's always some
ambiguity, but not terribly much in this case, I would judge.

SENATOR ROBB: I think that's where I'll leave that one.

Mr. Chairman, I thank you. I look forward to the testimony. I thank
Dr. Deutch for his testimony, and I know that he visited with each member
of the committee and gave us an opportunity to explore a number of other
matters in greater detail, and for that I want to add my thanks as well.

DR. DEUTCH: Thank you, Senator Robb.

SENATOR SPECTER: Director Deutch, you testified in response to questions
from Senator Kerrey that you were reasonably confident that the U.S.
intelligence community could detect nuclear weapons in foreign hands?

DR. DEUTCH: The development programs for nuclear weapons, sir. I thought
I was...

SENATOR SPECTER: The development of programs?

DR. DEUTCH: Development of nuclear weapons programs by other countries
is the question I thought I was addressing, sir.

SENATOR SPECTER: And that you were also reasonably confident that
you could detect ballistic missile development.

DR. DEUTCH: Programs. Yes, sir.

SENATOR SPECTER: Well, does that leave anything out then? Do you have
a reasonable level of confidence that at least that area of weapon of
mass destruction you're able to detect?

DR. DEUTCH: Yes. It leaves out chemical and biological weapon programs,
development programs.

SENATOR SPECTER: What is our level of ability to monitor and detect
biological weapons, chemical weapons?

DR. DEUTCH: It's a lot more uncertain, sir, because of the fact that
much of the technology used in those programs is dual-use. So the equipment
and the technology can be procured for another purpose and then be diverted.
It's hard to track it. It doesn't require large facilities. It doesn't
require special nuclear materials. It doesn't require tremendous electricity
or other signatures. So it's much more a matter where we have to have
the ingenuity of our intelligence, mostly human intelligence services,
discover it.

SENATOR SPECTER: Director Deutch, you identified the Indian subcontinent
as being the most volatile hot spot in the world?

DR. DEUTCH: Yes, sir.

SENATOR SPECTER: Some time ago Senator Brown and I had occasion to
visit in both India and Pakistan. We talked to Indian Prime Minister
Rao, who expressed his hope that the subcontinent could become nuclear
free. We later had a chance to talk to Pakistan's Prime Minister, Benazir
Bhutto, who was surprised to hear that. She even asked if we had it
in writing. I was surprised to hear that the prime ministers of India
and Pakistan do not communicate with each other.

What would your sense be about, this may be a little bit out of strictly
the intelligence-gathering line, but perhaps your intelligence-gathering
does bear on it, for an initiative to try and bring together the officials
of India and Pakistan, very much the way the United States has brought
together the officials in the Mideast? It might be that a morning in
the Oval Office, an invitation that few can resist, could have some
very dramatic effects of bringing those two countries to talk to each
other.

DR. DEUTCH: I think I'll take, if I can, sir, a pass on that. I think
that's really a question about what is the way we want to carry out
our policy on the Indian subcontinent, and I don't think that I'm really
in a position or the right person to address that question, sir.

SENATOR SPECTER: Are you still a member of the President's Cabinet?

DR. DEUTCH: That's correct, sir.

SENATOR SPECTER: We had a long discussion about that when you became
a Cabinet officer. I thought that opened the door to questions like
that, Director Deutch.

DR. DEUTCH: It certainly opened the door, but not to the right answer,
sir. I try very hard, as you know, not to allow myself as the principal
intelligence officer to get involved in policy-formulation.

SENATOR SPECTER: Okay. It does open the door, subject to being closed.

DR. DEUTCH: Thank you, sir.

SENATOR SPECTER: On the intelligence line, what is the threat assessment
as to Pakistan's development of nuclear weapons, the current strained
relations, the likelihood of some military action between those two
powers?

DR. DEUTCH: I think that the tensions between those two countries,
the animosity that exists, the problems that are present in Kashmir
all point to a very, very tense situation and one that we watch very
closely. And hostilities there certainly are a possibility.

SENATOR SPECTER: Director Deutch, you commented that the United States
intelligence community ought not to take activity to give any company
an economic advantage in international trade. There is a collateral
concern about economic espionage and the ability of the U.S. intelligence
community to protect -- not a sword, but a shield -- to protect U.S.
competitive interests. How serious a problem is economic espionage today
in its potential adverse effects against U.S. companies?

DR. DEUTCH: I would have drawn the most serious concern to be from
foreign corrupt practices, in particular negotiations which may take
place abroad in commercial contracts, as being the most serious threat
to unleveling a competitive playing field. I think the economic espionage
against U.S. companies or U.S. firms or individuals is much less prevalent,
but something that we try and assess, we do assess, and inform policymakers
when we find that something is going on.

SENATOR SPECTER: If you find a U.S. company is the victim of economic
espionage, do you pass that information on to the company?

DR. DEUTCH: No, sir. We would not do that. We would pass it on to
a policymaker to make the judgment about the manner and way to...

SENATOR SPECTER: When you say a policymaker...

DR. DEUTCH: The Secretary of Commerce, the Secretary of State, depending
on the circumstances.

SENATOR SPECTER: I had intended to ask you next, and will now, about
the subject that you broach, and that is corrupt practices. We have
a foreign corrupt practice act which properly prevent U.S. companies
from bribing public officials, but other nations do not.

DR. DEUTCH: Correct.

SENATOR SPECTER: Senator Bennett Johnston, a member of this committee,
and I have been talking -- really his initiative and his idea -- to
introduce legislation which would impose a sanction on such a company
in a foreign country, and perhaps impose a sanction on a country itself
for not taking steps to stop those corrupt practices. What's your view
of that?

DR. DEUTCH: I'm not sure. I'd have to see the legislation and think
it through. It's certainly, again, not an intelligence matter what legislation
is adopted.

I will say to you that I think the intelligence community should be
monitoring parts of the world where corrupt practices do lead to an
unfair marketplace for American business.

SENATOR SPECTER: Those corrupt practices do come to the attention
of the U.S. intelligence community, do they not?

DR. DEUTCH: Yes, they do.

SENATOR SPECTER: How do you handle those? Pass them on to policymakers?

DR. DEUTCH: That's correct. Yes, sir. And I think it's important that
we do that.

SENATOR SPECTER: Do you know what the practice of the policymakers
then is by way of notifying the U.S. companies?

DR. DEUTCH: I think they're aggressive in that, but we can get you
a more complete answer. I'm not prepared to do that now. I'm literally
not prepared.

SENATOR SPECTER: With respect to our relations with Mexico, Director
Deutch, just how serious is the narcotics trade out of Mexico? We have
not adopted a policy of sanctions against our very close neighbor, but
how serious is the drug traffic coming out of Mexico?

DR. DEUTCH: I think the Mexican government and we are of a single
mind on this, and that is that it is very serious indeed, that there
is a growing passage of drugs through Mexico, a growing manufacture
of certain kinds of drugs in Mexico. It's very serious for the American
people. It's very serious for the Mexican people. I think our two governments
are quite together on the difficulty that this poses for us.

SENATOR SPECTER: In addition to being of a single mind on it, how
effective is the Mexican government in acting against the drug traffic?

DR. DEUTCH: We are working with them through our law enforcement cooperative
agreements, through the embassy down in Mexico City, through the State
Department, to help them in their efforts to fight drugs. I would say
that they are not as strong as we would like them to be.

SENATOR SPECTER: Well, that's not... I understand the limitations
of your response, but that's not a very precise response. It seems to
me we really... I see you furrowing your brow. Do you want to supplement
that or disagree with me?

DR. DEUTCH: I would be happy to be very much more precise in closed
session, sir.

SENATOR SPECTER: Well, is the Mexican government really serious about
stopping the drug traffic?

DR. DEUTCH: I think the Mexican government and President Zedillo is
very serious about it, yes sir. They're...

SENATOR SPECTER: Are they effective at all on it?

DR. DEUTCH: Not as effective as they should be, sir.

SENATOR SPECTER: Well, this is going to be my final round. There are
some further questions I have as to Iran and Iraq, and perhaps I could
pose a question and ask you to respond in writing, not to take any more
of your time.

I would be interested in your assessment as to the level of cooperation
with our allies on sanctions against Iran. We have adopted a policy
of sanctions against Iran and we are undertaking no discussion with
them to try to isolate them. From my observations I do not see that
as very successful because our allies are not supporting us in that.
I would be interested in a written response on that subject if you could
provide it.

DR. DEUTCH: Absolutely, Senator. Absolutely.

SENATOR SPECTER: And on the question of Iraq, I'd be interested in
an updating as to your assessment as to how strong Saddam Hussein is
at the present time, and what the implications are of his welcoming
back, or at least the public reports about his sons-in-law returning.

DR. DEUTCH: I'd be happy to do that, sir.

SENATOR SPECTER: And I've been advised by my staff, and we want to
pursue this further, but I want to put this issue to you publicly, that
staff advises that the NRO did not know the aggregate carry-forward,
and did not make those disclosures, and that that's demonstrated by
the NRO now changing its policy on the amount in this account. And also
staff advises that the NRO did not report to Congress these balances
every year.

What I'd like you to do is to take a look at those factual matters
and let us know. And to the extent that you can provide those responses
in an unclassified form, we would appreciate it so that it can be publicly
disseminated.

DR. DEUTCH: Yes, Mr. Chairman.

SENATOR SPECTER: Senator Kerrey?

SENATOR KERREY: I have no other questions.

SENATOR SPECTER: Senator Robb?

SENATOR ROBB: I look forward to the next witnesses.

Thank you, Mr. Chairman.

DR. DEUTCH: Thank you, Mr. Chairman.

SENATOR SPECTER: Thank you very much, Director Deutch. If you would
wait just a moment, I'd like to talk to you privately.